Google’s paid clicks rise 20% in the first quarter

Google Inc.’s paid clicks rose 20% year over year in the first quarter of 2013 ended March 31, the search engine announced today. Paid clicks were up about 3% in the first quarter 2013 over the fourth quarter 2012.

Meanwhile, Google’s average cost-per-click was down 4% in the first quarter over both the first quarter last year and the fourth quarter 2012, it reports.

The search engine’s consolidated revenue in the first quarter was $13.97 billion, an increase of 31.1% from $10.65 billion in the first quarter of 2012. Of that, its mobile phone maker subsidiary Motorola Mobility accounted for $1.02 billion, or about 7% of consolidated revenues, it says.

Google’s net income in the first quarter was $3.35 billion, up 15.9% from $2.89 billion in the first quarter of 2012.

In discussing the earnings report with analysts today, Google executives commented on the early impact of a revision in AdWords announced in February called Enhanced Campaigns. Google says the new advertising system is designed to make it easier to reach consumers who are moving constantly among many devices; one of the most-discussed features of the new program is that tablets and PCs are treated equally, so that advertisers, for example, can no longer target just tablet users.

To date, 1.5 million ad campaigns have migrated over to the new format, Nikesh Arora, senior vice president and chief business officer at Google, told analysts. “Enhanced Campaigns is a big long-term bet that will help marketers,” he said. By the end of the quarter, he said Google expects all advertising campaigns will be updated into the new format.

“The reason we’ve been successful in advertising is we see it as another source of information,” said CEO Larry Page in the webcast, underscoring Google’s claim that the new system will present consumers with more relevant ads.

For the first quarter, Google also reports:

• Google-owned sites, such as the Google.com search engine and YouTube, contributed $8.64 billion, or approximately 67% of revenue, excluding Motorola. That’s up 18.2% from $7.31 billion in the same period a year ago and flat with Q4 2012.

• Google reported a 24.4% increase in Google network revenue to approximately $3.62 billion from $2.91 billion a year ago. This is revenue Google receives from clicks on ads it places on the web sites of other companies, including retailers’ sites.

• Google’s traffic acquisition costs, or TAC—that is, the portion of revenue Google pays to web sites that host Google ads—increased to $2.96 billion in the fourth quarter, up 17.9% year over year from $2.51 billion. TAC as a percentage of advertising revenue remained 25% in the first quarter, the same as in the first quarter of 2012.

• Google also said that its revenue from outside the United States was $7.1 billion, representing 55% of non-Motorola revenue in the fourth quarter, up slightly from 54% in both the first and fourth quarters of 2012.

• Worldwide, Google employed 53,891 full-time staffers in the first quarter of 2013, just 30 more than in the same period a year ago, it says.